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NIVEUS NOW WITH MORE OF KWV

Niveus mops up additional shares.

Niveus Investments has started using its highly regarded scrip to mop up additional shares in unlisted liquor group KWV Holdings.

Niveus was recently unbundled from empowerment giant Hosken Consolidated Investments (HCI). It disclosed the acquisition of 8m KWV shares from Withmore Investments in December last year.

The share purchase, which cost around R78m, increases Niveus’s stake in KWV to just over 51%.

That means within the past two years HCI/Niveus has managed to grab another 16% of KWV.

The latest deal will be settled mostly by the issue of new shares in Niveus to Withmore with only R7,3m of the transaction settled in cash.

Taking into consideration Niveus’s ruling share price at the time of the transaction, it seems Niveus paid 975c/share for Withmore’s holding.

This is considerably higher than the 850c/share offer dangled (unsuccessfully) before minority shareholders by HCI before the unbundling of Niveus late in 2011.

Outlining the rationale for the transaction, Niveus said the settlement terms offered Withmore an opportunity to diversify its investment from being in a liquor company only and to access returns from a broader asset base. Withmore was initially the official empowerment partner to KWV.

KWV, which has recently spruced up its traditional wine and brandy offering with ready-to-drink brands, has endured difficult trading conditions in the past two years. The company, which is incurring additional marketing and production expenses to promote its brand expansion, is not expected to trade its way out of the red in the short term.

The big question is whether Niveus will consider approaching other sizeable shareholders in KWV with an offer of a scrip swap.

Niveus has enjoyed a strong run on the JSE since being split off from HCI in July. The share, which carried an inferred value of 933c, has sped from a listing price of 712c to R13,50.

Niveus carries HCI’s “growth assets” which, aside from KWV, include its investments in limited payout machine gaming, electronic bingo and automotive group Formex.

Financial Mail – Marc Hasenfuss